<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) MAY 12, 2000
OMEGA ENVIRONMENTAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Commission File Number 0-20267
DELAWARE 91-1499751
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
550 KIRKLAND WAY, SUITE 200, KIRKLAND, WASHINGTON 98033
PO BOX 3005 BOTHELL, WASHINGTON 98041-3005
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
425-739-2072
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
-------------------------------------------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Since May 2, 1997, Registrant is operating under the protection of the
United States Bankruptcy Code as a debtor-in-possession.
ITEM 5. OTHER EVENTS
UNAUDITED FINANCIAL STATEMENT INFORMATION
On May 12, 2000, the Registrant filed unaudited financial statement
information as of and for each of the months ended February 29, 2000
and January 31, 2000 with related notes with the United States
Bankruptcy Court. Exhibit 99-1 is the Comparative Balance Sheet
Information, Comparative Statement of Operations Information,
Comparative Statement of Cash Flows Information and related notes to
financial statement information as included in the bankruptcy filing
referred to above.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
C) EXHIBITS
99.1 Unaudited Comparative Balance Sheet Information, Comparative
Statement of Operations Information and Comparative
Statement of Cash Flow Information as of and for each of the
months ended February 29, 2000 and January 31, 2000 with
related Notes to Financial Statement Information.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OMEGA ENVIRONMENTAL, INC.
(Registrant)
Date: May 12, 2000 /s/ Donald E. Condit
----------------------------------
Donald E. Condit,
Chief Financial Officer
<PAGE>
OMEGA ENVIRONMENTAL, INC. EXHIBIT 99.1
Debtor In Possession Case #97-06084
Comparative Balance Sheet Information
<TABLE>
<CAPTION>
(unaudited) (unaudited) (unaudited) (unaudited)
February 29, January 31, February 29, January 31,
2000 2000 2000 2000
ESD ESD Change Corporate Corporate Change
---------- ---------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash 17,469 38,230 (20,761) 161,402 519,668 (358,266)
Restricted cash held in escrow -- -- -- --
Accounts receivable
A/R--trade 9,902,508 9,802,314 100,194 -- -- --
A/R--employees 16,485 (1,375) 17,860 -- -- --
A/R--supplemental -- -- -- --
A/R--miscellaneous -- -- -- 1,224,094 1,224,094 --
Allowance for doubtful accounts (497,534) (507,847) 10,313 (1,076,094) (1,076,094) --
---------- ---------- -------- ---------- ---------- --------
Accounts receivable, net 9,421,459 9,293,092 128,367 148,000 148,000 --
---------- ---------- -------- ---------- ---------- --------
Costs and earnings in excess of billings 4,749,180 5,784,820 (1,035,640) --
Costs and earnings in excess of billings
for Remediation Systems 676,049 -- 676,049 --
Prepaid expenses 219,149 105,671 113,478 119,948 27,554 92,394
---------- ---------- -------- ---------- ---------- --------
TOTAL CURRENT ASSETS 15,083,306 15,221,813 (138,507) 429,350 695,222 (265,872)
---------- ---------- -------- ---------- ---------- --------
PROPERTY AND EQUIPMENT
Field equipment 2,172,681 2,209,331 (36,650) -- -- --
Automotive equipment 932,781 921,724 11,057 -- -- --
Office furniture and equipment 1,017,001 1,005,929 11,072 27,206 27,206 --
Land, Building, and leasehold
improvements 107,729 107,729 -- -- -- --
---------- ---------- -------- ---------- ---------- --------
TOTAL PROPERTY & EQUIP., AT COST 4,230,192 4,244,713 (14,521) 27,206 27,206 --
Accum. Depreciation (3,355,457) (3,352,270) (3,187) (27,206) (27,206) --
---------- ---------- -------- ---------- ---------- --------
TOTAL PROPERTY & EQUIP., NET 874,735 892,443 (17,708) -- -- --
---------- ---------- -------- ---------- ---------- --------
Other Assets 88,941 89,641 (700) 41,622 41,622 --
Investment & Intercompany in Subsidiaries -- 74,375,431 74,375,431 --
---------- ---------- -------- ---------- ---------- --------
TOTAL ASSETS 16,046,982 16,203,897 (156,915) 74,846,403 75,112,275 (265,872)
========== ========== ======== ========== ========== ========
POST PETITION CURRENT LIABILITIES
Accounts payable 933,480 974,217 (40,737) 33,427 29,161 4,266
Accounts payable - remediation systems 676,049 655,399 20,650 -- -- --
Line of Credit with GMAC -- 25,704,314 25,537,255 167,059
Transfer of Pre-petition preference
collections from vendors -- (925,021) (796,263) (128,758)
---------- ---------- -------- ---------- ---------- --------
Line of Credit with GMAC, net of
pre-petition preferences -- -- -- 24,779,293 24,740,992 38,301
Accrued expenses, excluding bankruptcy
costs 562,441 577,161 (14,720) 8,308 8,308 --
Estimated claims against cash held in
escrow -- -- -- -- -- --
---------- ---------- -------- ---------- ---------- --------
TOTAL POST PETITION CURRENT LIABILITIES 8,779,750 8,606,737 173,013 9,548,008 9,582,161 (34,153)
Intercompany Notes Payable 7,435,857 7,435,857 -- --
Pre Petition Preference collections from
vendors -- -- -- 925,021 796,263 128,758
Pre Petition Liabilities -- -- -- 3,606,863 3,606,863 --
Pre Petition Estimated Construction
Claims -- -- --
---------- ---------- -------- ---------- ---------- --------
TOTAL LIABILITIES 16,215,607 16,042,594 173,013 14,079,892 13,985,287 94,605
---------- ---------- -------- ---------- ---------- --------
SHAREHOLDERS' EQUITY
Common stock at par 121,289 121,289 --
Additional paid in capital 14,557,677 14,557,677 -- 127,234,871 127,234,871 --
Treasury Stock A-P-I-C (562,506) (562,506) --
Retained earnings - prior (9,028,340) (9,028,340) -- (49,321,103) (49,321,103) --
Y-T-D net income pre petition (8,532) (8,532) -- (2,399,934) (2,399,934) --
Y-T-D net income post petition (5,689,430) (5,359,502) (329,928) (14,306,106) (13,945,629) (360,477)
---------- ---------- -------- ---------- ---------- --------
TOTAL SHAREHOLDERS' EQUITY (168,625) 161,303 (329,928) 60,766,511 61,126,988 (360,477)
---------- ---------- -------- ---------- ---------- --------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 16,046,982 16,203,897 (156,915) 74,846,403 75,112,275 (265,872)
========== ========== ======== ========== ========== ========
</TABLE>
<PAGE>
OMEGA ENVIRONMENTAL, INC. EXHIBIT 99.1
Debtor In Possession Case #97-06084
Comparative Balance Sheet Information
<TABLE>
<CAPTION>
(unaudited) (unaudited) (unaudited) (unaudited)
February 29, January 31, February 29, January 31,
2000 2000 2000 2000
Continuing Continuing Discontinued Discontinued
Operations Operations Change Operations Operations Change
---------- ---------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash 178,871 557,898 (379,027) -- -- --
Restricted cash held in escrow -- -- -- 2,730,694 2,726,798 3,896
Accounts receivable
A/R--trade 9,902,508 9,802,314 100,194 3,240,282 3,240,282 --
A/R--employees 16,485 (1,375) 17,860 --
A/R--supplemental -- -- -- --
A/R--miscellaneous 1,224,094 1,224,094 -- 1,253,064 1,253,064 --
Allowance for doubtful accounts (1,573,628) (1,583,941) 10,313 (3,411,768) (3,411,768) --
---------- ---------- -------- ---------- ---------- --------
Accounts receivable, net 9,569,459 9,441,092 128,367 1,081,578 1,081,578 --
---------- ---------- -------- ---------- ---------- --------
Costs and earnings in excess of billings 4,749,180 5,784,820 (1,035,640) --
Costs and earnings in excess of billings
for Remediation Systems 676,049 -- 676,049 --
Prepaid expenses 339,097 133,225 205,872 -- -- --
---------- ---------- -------- ---------- ---------- --------
TOTAL CURRENT ASSETS 15,512,656 15,917,035 (404,379) 3,812,272 3,808,376 3,896
---------- ---------- -------- ---------- ---------- --------
PROPERTY AND EQUIPMENT
Field equipment 2,172,681 2,209,331 (36,650) 1,000 1,000 --
Automotive equipment 932,781 921,724 11,057 -- -- --
Office furniture and equipment 1,044,207 1,033,135 11,072 -- -- --
Land, Building, and leasehold
improvements 107,729 107,729 -- -- -- --
---------- ---------- -------- ---------- ---------- --------
TOTAL PROPERTY & EQUIP., AT COST 4,257,398 4,271,919 (14,521) 1,000 1,000 --
Accum. Depreciation (3,382,663) (3,379,476) (3,187) -- -- --
---------- ---------- -------- ---------- ---------- --------
TOTAL PROPERTY & EQUIP., NET 874,735 892,443 (17,708) 1,000 1,000 --
Other Assets 130,563 131,263 (700) -- -- --
Investment & Intercompany in Subsidiaries 74,375,431 74,375,431 -- -- -- --
---------- ---------- -------- ---------- ---------- --------
TOTAL ASSETS 90,893,385 91,316,172 (422,787) 3,813,272 3,809,376 3,896
========== ========== ======== ========== ========== ========
POST PETITION CURRENT LIABILITIES
Accounts payable 966,907 1,003,378 (36,471) -- -- --
Accounts payable - remediation systems 676,049 655,399 20,650 -- -- --
Line of Credit with GMAC 25,704,314 25,537,255 167,059 -- -- --
Transfer of Pre-petition preference
collections from vendors (925,021) (796,263) (128,758) -- -- --
---------- ---------- -------- ---------- ---------- --------
Line of Credit with GMAC, net of
pre-petition preferences 24,779,293 24,740,992 38,301 -- -- --
Accrued expenses, excluding bankruptcy
costs 570,749 585,469 (14,720) 69,976 69,976 --
Estimated claims against cash held in
escrow -- -- -- 2,532,449 2,528,553 3,896
---------- ---------- -------- ---------- ---------- --------
TOTAL POST PETITION CURRENT LIABILITIES 18,327,758 18,188,898 138,860 12,646,763 12,673,967 (27,204)
Intercompany Notes Payable 7,435,857 7,435,857 -- 4,811,126 4,811,126 --
Pre Petition Preference collections from
vendors 925,021 796,263 128,758 --
Pre Petition Liabilities 3,606,863 3,606,863 -- 11,809,110 11,809,110 --
Pre Petition Estimated Construction Claims -- -- -- 1,800,000 1,800,000 --
---------- ---------- -------- ---------- ---------- --------
TOTAL LIABILITIES 30,295,499 30,027,881 267,618 31,066,999 31,094,203 (27,204)
---------- ---------- -------- ---------- ---------- --------
SHAREHOLDERS' EQUITY
Common stock at par 121,289 121,289 -- 5,454,120 5,454,120 --
Additional paid in capital 141,792,548 141,792,548 -- 39,347,007 39,347,007 --
Treasury Stock A-P-I-C (562,506) (562,506) -- -- -- --
Retained earnings - prior (58,349,443) (58,349,443) -- (53,656,003) (53,656,003) --
Y-T-D net income pre petition (2,408,466) (2,408,466) -- 499,770 499,770 --
Y-T-D net income post petition (19,995,536) (19,305,131) (690,405) (18,898,621) (18,929,721) 31,100
---------- ---------- -------- ---------- ---------- --------
TOTAL SHAREHOLDERS' EQUITY 60,597,886 61,288,291 (690,405) (27,253,727) (27,284,827) 31,100
---------- ---------- -------- ---------- ---------- --------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 90,893,385 91,316,172 (422,787) 3,813,272 3,809,376 3,896
========== ========== ======== ========== ========== ========
</TABLE>
<PAGE>
OMEGA ENVIRONMENTAL, INC. EXHIBIT 99.1
Debtor In Possession Case #97-06084
Comparative Balance Sheet Information
<TABLE>
<CAPTION>
(unaudited) (unaudited)
February January 31,
2000 2000
Combined Combined
Final Final Change
------------ ------------ --------
<S> <C> <C> <C>
CURRENT ASSETS
Cash 178,871 557,898 (379,027)
Restricted cash held in escrow 2,730,694 2,726,798 3,896
Accounts receivable
A/R--trade 13,142,790 13,042,596 100,194
A/R--employees 16,485 (1,375) 17,860
A/R--supplemental -- -- --
A/R--miscellaneous 2,477,158 2,477,158 --
Allowance for doubtful accounts (4,985,396) (4,995,709) 10,313
------------ ------------ --------
Accounts receivable, net 10,651,037 10,522,670 128,367
------------ ------------ --------
Costs and earnings in excess of billings 4,749,180 5,784,820 (1,035,640)
Costs and earnings in excess of billings
for Remediation Systems 676,049 -- 676,049
Prepaid expenses 339,097 133,225 205,872
------------ ------------ --------
TOTAL CURRENT ASSETS 19,324,928 19,725,411 (400,483)
------------ ------------ --------
PROPERTY AND EQUIPMENT
Field equipment 2,173,681 2,210,331 (36,650)
Automotive equipment 932,781 921,724 11,057
Office furniture and equipment 1,044,207 1,033,135 11,072
Land, Building, and leasehold
improvements 107,729 107,729 --
------------ ------------ --------
TOTAL PROPERTY & EQUIP., AT COST 4,258,398 4,272,919 (14,521)
Accum. Depreciation (3,382,663) (3,379,476) (3,187)
------------ ------------ --------
TOTAL PROPERTY & EQUIP., NET 875,735 893,443 (17,708)
------------ ------------ --------
Other Assets 130,563 131,263 (700)
Investment & Intercompany in Subsidiaries 0 0 --
------------ ------------ --------
TOTAL ASSETS 20,331,226 20,750,117 (418,891)
============ ============ ========
POST PETITION CURRENT LIABILITIES
Accounts payable 966,907 1,003,378 (36,471)
Accounts payable - remediation systems 676,049 655,399 20,650
Line of Credit with GMAC 25,704,314 25,537,255 167,059
Transfer of Pre-petition preference
collections from vendors (925,021) (796,263) (128,758)
------------ ------------ --------
Line of Credit with GMAC, net of
pre-petition preferences 24,779,293 24,740,992 38,301
Accrued expenses, excluding bankruptcy
costs 640,725 655,445 (14,720)
Estimated claims against cash held in
escrow 2,532,449 2,528,553 3,896
------------ ------------ --------
TOTAL POST PETITION CURRENT LIABILITIES 30,974,521 30,862,865 111,656
Intercompany Notes Payable -- -- --
Pre Petition Preference collections from
vendors 925,021 796,263 128,758
Pre Petition Liabilities 15,415,973 15,415,973 --
Pre Petition Estimated Construction Claims 1,800,000 1,800,000 --
------------ ------------ --------
TOTAL LIABILITIES 49,115,515 48,875,101 240,414
------------ ------------ --------
SHAREHOLDERS' EQUITY
Common stock at par 121,289 121,289 --
Additional paid in capital 124,465,227 124,465,227 --
Treasury Stock A-P-I-C (562,506) (562,506) --
Retained earnings - prior (112,005,446) (112,005,446) --
Y-T-D net income pre petition (1,908,696) (1,908,696) --
Y-T-D net income post petition (38,894,157) (38,234,852) (659,305)
------------ ------------ --------
TOTAL SHAREHOLDERS' EQUITY (28,784,289) (28,124,984) (659,305)
------------ ------------ --------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 20,331,226 20,750,117 (418,891)
============ ============ ========
</TABLE>
<PAGE>
OMEGA ENVIRONMENTAL, INC. EXHIBIT 99.1
Debtor In Possession Case #97-06084
Comparative Statement of
Operations Information
<TABLE>
<CAPTION>
(unaudited) (unaudited) (unaudited) (unaudited)
Month Ended Month Ended Month Ended Month Ended
February 29, January 31, February 29, January 31,
2000 2000 2000 2000
ESD ESD Change Corporate Corporate Change
-------- --------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Sales 998,146 1,196,532 (198,386) -- -- --
Cost of Sales 873,151 845,169 27,982 -- -- --
-------- --------- -------- -------- -------- ------
Gross Profit 124,995 351,363 (226,368) -- -- --
Selling, General, and Administrative 398,397 385,472 12,925 63,010 55,849 7,161
-------- --------- -------- -------- -------- ------
Income (Loss) From Operations (273,402) (34,109) (239,293) (63,010) (55,849) (7,161)
Other Income (Expense):
I/C Interest Income (Expense) (56,526) (54,787) (1,739) 56,526 54,787 1,739
Interest Expense -- (2) 2 (227,363) (215,561) (11,802)
Other Expense -- 74 (74) (4,513) (2,530) (1,983)
-------- --------- -------- -------- -------- ------
Total Other (Expense) (56,526) (54,715) (1,811) (175,350) (163,304) (12,046)
Net Income (Loss) Before Bankruptcy
Administrative Expenses (329,928) (88,824) (241,104) (238,360) (219,153) (19,207)
Bankruptcy Administrative Expenses (122,117) (135,558) 13,441
-------- --------- -------- -------- -------- ------
Net Income (Loss) (329,928) (88,824) (241,104) (360,477) (354,711) (5,766)
======== ========= ======== ======== ======== ======
</TABLE>
<PAGE>
OMEGA ENVIRONMENTAL, INC. EXHIBIT 99.1
Debtor In Possession Case #97-06084
Comparative Statement of
Operations Information
<TABLE>
<CAPTION>
(unaudited) (unaudited) (unaudited) (unaudited)
Month Ended Month Ended Month Ended Month Ended
February 29, January 31, February 29, January 31,
2000 2000 2000 2000
Continuing Continuing Discontinued Discontinued
Operations Operations Change Operations Operations Change
-------- -------- -------- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
Sales 998,146 1,196,532 (198,386) -- -- --
Cost of Sales 873,151 845,169 27,982 -- -- --
-------- -------- -------- ------ ---- ------
Gross Profit 124,995 351,363 (226,368) -- -- --
Selling, General, and Administrative 461,407 441,321 20,086 -- -- --
-------- -------- -------- ------ ---- ------
Income (Loss) From Operations (336,412) (89,958) (246,454) -- -- --
Other Income (Expense):
I/C Interest Income (Expense) -- -- -- -- -- --
Interest Expense (227,363) (215,563) (11,800) -- -- --
Other Expense (4,513) (2,456) (2,057) 31,100 (528) 31,628
-------- -------- -------- ------ ---- ------
Total Other (Expense) (231,876) (218,019) (13,857) 31,100 (528) 31,628
Net Income (Loss) Before Bankruptcy
Administrative Expenses (568,288) (307,977) (260,311) 31,100 (528) 31,628
Bankruptcy Administrative Expenses (122,117) (135,558) 13,441 -- -- 0
-------- -------- -------- ------ ---- ------
Net Income (Loss) (690,405) (443,535) (246,870) 31,100 (528) 31,628
======== ======== ======== ====== ==== ======
</TABLE>
<PAGE>
OMEGA ENVIRONMENTAL, INC. EXHIBIT 99.1
Debtor In Possession Case #97-06084
Comparative Statement of
Operations Information
<TABLE>
<CAPTION>
(unaudited) (unaudited)
Month Ended Month Ended
February 29, January 31,
2000 2000
Combined Combined
Final Final Change
-------- -------- --------
<S> <C> <C> <C>
Sales 998,146 1,196,532 (198,386)
Cost of Sales 873,151 845,169 27,982
-------- -------- --------
Gross Profit 124,995 351,363 (226,368)
Selling, General, and Administrative 461,407 441,321 20,086
-------- -------- --------
Income (Loss) From Operations (336,412) (89,958) (246,454)
Other Income (Expense):
I/C Interest Income (Expense) -- -- --
Interest Expense (227,363) (215,563) (11,800)
Other Expense 26,587 (2,984) 29,571
-------- -------- --------
Total Other (Expense) (200,776) (218,547) 17,771
Net Income (Loss) Before Bankruptcy
Administrative Expenses (537,188) (308,505) (228,683)
Bankruptcy Administrative Expenses (122,117) (135,558) 13,441
-------- -------- --------
Net Income (Loss) (659,305) (444,063) (215,242)
======== ======== ========
</TABLE>
<PAGE>
OMEGA ENVIRONMENTAL, INC. EXHIBIT 99.1
Debtor in Possession Case # 97-06084
COMPARATIVE COMBINED STATEMENT OF CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
(unaudited) (unaudited)
Month Ended Month Ended
February 29, January 31,
2000 2000 Change
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $( 659,305) $( 444,063) $( 215,242)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation 40,304 41,146 (842)
Write off of accounts receivable 105,920 0 105,920
(Gain) / Loss on sale of property and equipment 0 0 0
Change in certain assets & liabilities:
(Increase) decrease in:
Receivables, net (234,287) (442,419) 208,132
Receivables - remediation systems, net 0 0 0
Costs in excess of billings 380,241 (185,717) 565,958
Costs in excess of billings - remediation systems (20,650)
Prepaids & other assets (205,872) 98,523 (304,395)
Increase (decrease) in:
Accounts payable - remediation systems 20,650 655,399 (634,749)
Accrued expenses 85,280 191,452 (106,172)
Billings in excess of costs 0 0 0
Other net changes in assets and liabilities 700 3,295 (2,595)
------------ ------------ ------------
Total adjustments 135,815 (343,375) 499,840
------------ ------------ ------------
Net cash provided by (used in) operating activities (523,490) (787,438) 284,598
Cash flows from investing activities:
Proceeds from sale of equipment 11,002 0 11,002
Additions to property and equipment (33,597) (1,750) (31,847)
------------ ------------ ------------
Net cash provided by (used in) investing activities (22,595) (1,750) (20,845)
Cash flows from financing and other activities:
Net proceeds (repayments) from revolver credit loan 167,059 747,952 (580,893)
Proceeds from pre-petition preference payment receipts 128,578 109,627 18,951
(Reduction) Increase of pre-petition liabilities (128,578) (109,627) (18,951)
------------ ------------ ------------
Net cash provided by (used in) financing activities 167,059 747,952 (580,893)
------------ ------------ ------------
Net increase (decrease) in cash (379,026) (41,236) (317,140)
CASH AT BEGINNING OF PERIOD 557,898 599,134 (41,236)
------------ ------------ ------------
CASH AT END OF PERIOD $ 178,871 $ 557,898 $( 358,376)
============ ============ ============
</TABLE>
<PAGE>
EXHIBIT 99.1
Omega Environmental, Inc.
Debtor in Possession Case # 97-06084
February 29, 2000 Financial Reporting Information
Notes to Financial Statement Information
Basis of Presentation
The financial statement information presented is unaudited and does not comply
with generally accepted accounting principles. Additionally, significant
estimates were used in the preparation of this financial statement information
and actual results may vary significantly from these estimates.
GMAC Credit Corporation
As of February 29, 2000, the Company's borrowings from GMAC Credit Corporation
("GMACCC") were $25,704,314.
Costs and Earnings in Excess of Billing
The asset, "Costs and earnings in excess of billings" recorded on the
Environmental Services Division's balance sheet, represents estimated revenues
recognized in excess of amounts billed using the percentage of completion method
of contract accounting. In the past, as projects were completed and billed,
significant write-offs of this asset were recorded in excess of reserves
provided. Management believes that as a result of improvements in project
management and time charging practices no material write-offs in excess of the
normal allocated reserves will be required in the future.
Accounts Receivable
Accounts receivable recorded on the Environmental Services Division's balance
sheet are primarily due from various State reimbursement programs for clean up
of leaking underground storage tanks. The collection period for these
receivables frequently exceeds 180 days. Due to the significant amount of time
required to collect these receivables, management is continually analyzing the
collectability of these accounts and estimated bad debts may be significantly in
excess of established reserves. The results of this analysis are not complete at
this time due to the lengthy collection time frame, and any adjustment may have
a material adverse effect on the financial statements.
<PAGE>
Accounts receivable recorded on the Discontinued Operation's balance sheet
primarily represent amounts recorded as due from customers of the company's
discontinued construction business. The amounts ultimately collected by the
company will be significantly less than net recorded amounts in part because of
set-offs, liens, bonding issues and customer disputes which may result in
refusal to pay receivable amounts or require payment or set-off of pre-petition
liabilities and claims. The amount ultimately collectible is not determinable at
this time.
Accounts receivable recorded on the corporate balance sheet of $148,000
represents funds held in escrow at Debtor's Bankruptcy Counsel as a result of
the Petroleum Services Division (PSD) Houston branch asset sale in December
1998. These funds are held in escrow pending the final determination of the
amount of liens asserted by Texas tax authorities.
Florida Supplemental
In January 2000, the ESD Florida Supplemental balances were transferred to
Discontinued Operations. The amounts of the transaction transferred were:
Restricted Cash Held in Escrow of $2.7 million, net receivables of $300,000 and
Estimated claims against cash held in escrow of $2.5 million.
Pre-Petition Preference Receipts
Beginning in June 1999, Omega began collecting pre-petition preferences. These
are accounted for in the pre-petition liabilities section of the corporate
balance sheet. Collections for the month of February 2000 and total collections
since June 1999 were $128,758, and $925,091, respectively.
