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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to ____________________
Commission file number 1-11097
3CI COMPLETE COMPLIANCE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 76-0351992
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
910 Pierremont, #312 Shreveport, LA. 71106
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(Address of principal executive offices)
(Zip Code)
(318) 869-0440
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(Registrant's telephone number, including area code)
------------------------------
Indicate by check mark whether the registrant (1) has 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 [ ]
------------------------------
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as of the latest practicable date.
The number of shares of Common Stock outstanding as of the close of
business on February 16, 1998, was 9,714,311.
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3CI COMPLETE COMPLIANCE CORPORATION
I N D E X
<TABLE>
<CAPTION>
PAGE
NUMBER
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31, 1997 (unaudited) and September 30, 1997 . . . . 3
Consolidated Statements of Operations for the three months ended December 31, 1997 and 1996
(unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the three ended December 31, 1997 and 1996
(unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 4. Submission of Matters to a Vote Of Security Holders . . . . . . . . . . . . . . . . . . . . . . 14
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
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3CI COMPLETE COMPLIANCE CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1997
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<S> <C> <C>
ASSETS
Current Assets: $ -- $ --
Cash and cash equivalents
Restricted cash -- --
Accounts receivable, net allowances of $836,272 and $875,144
at December 31, 1997 and September 30, 1997, respectively 2,991,378 3,559,091
Inventory 58,152 71,886
Other current assets 176,987 440,373
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Total current assets 3,226,517 4,071,350
------------ ------------
Property, plant and equipment, at cost 11,096,459 10,927,159
Accumulated depreciation (2,712,327) (2,477,411)
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Net property, plant and equipment 8,384,132 8,449,748
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Excess of cost over net assets acquired, net of accumulated
amortization of $81,238 and $74,988 at December 31, 1997 and
September 30, 1997, respectively 355,993 362,243
Other intangible assets, net of accumulated amortization of $167,752
and $149,104 at December 31, 1997 and September 30, 1997,
respectively 255,627 274,264
------------ ------------
Total assets $ 12,222,269 $ 13,157,605
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Bank overdrafts $ 24,176 $ 156,880
Notes payable 38,794 217,525
Current portion of long-term debt, unaffiliated lenders 1,330,396 1,373,617
Accounts payable 1,535,526 1,034,924
Accounts payable, affiliated companies 409,156 391,156
Accrued liabilities 1,416,118 2,188,697
Note payable majority shareholder 4,948,746 4,844,217
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Total current liabilities 9,702,912 10,207,016
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Long-term debt unaffiliated lenders, net of current portion 685,003 986,467
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Total liabilities 10,387,915 11,193,483
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Shareholders' Equity (deficit);
Preferred stock, no par value, authorized 1,000,000 shares; issued
and outstanding 1,000,000 at December 31, 1997 and September 30,
1997, respectively 7,000,000 7,000,000
Treasury Stock (7,065)
Common Stock, $0.01 par value, authorized 15,000,000 shares; issued
and outstanding 9,154,811 at December 31, 1997 and September 30,
1997, respectively 91,549 91,549
Additional Paid-in capital 20,182,543 20,182,543
Accumulated deficit (25,432,673) (25,309,970)
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Total Shareholders' equity (deficit) 1,834,354 1,964,122
------------ ------------
Total liabilities and shareholders' equity (deficit) $ 12,222,269 $ 13,157,605
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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3CI COMPLETE COMPLIANCE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE THREE
MONTHS ENDED MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
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<S> <C> <C>
Revenues $ 4,600,534 $ 4,673,658
Expenses:
Cost of Services 3,437,167 3,499,959
Depreciation and Amortization 294,979 357,923
Selling, general and administrative 767,959 836,970
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Net income (loss) from Operations $ 100,439 $ (21,194)
Other Income (expense):
Interest and other expense (223,131) (324,382)
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Loss before income taxes and accretion of stock put (122,702) (345,576)
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Income taxes -- --
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Net loss $ (122,702) $ (345,576)
=========== ===========
Weighted average shares outstanding 9,153,833 9,034,811
=========== ===========
Net loss per common share $ (0.01) $ (0.04)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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3CI COMPLETE COMPLIANCE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE THREE
MONTHS ENDED MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
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<S> <C> <C>
Cash flow from operating activities:
Net loss (122,702) (345,576)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
(Gain) loss on disposal of fixed and intangible assets 34,888 --
Depreciation and amortization 294,979 357,923
Unpaid interest included in long-term debt
Change in assets and liabilities, net
(Increase) decrease in accounts receivable, net 567,713 (1,395,304)
(Increase) decrease in inventory 13,734 (36,940)
(Increase) decrease in prepaid expenses 263,386 144,547
Increase (decrease) in accounts payable 500,602 400,364
Increase (decrease) in accounts payable, affiliated
companies 18,000 18,000
Increase (decrease) in accrued liabilities (772,579) (160,898)
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Total adjustments to net loss 920,723 (672,308)
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Net cash provided by (used in) operating
activities 798,021 (1,017,884)
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Cash flow from investing activities:
Proceeds from sale of property, plant and equipment 22,325 16,083
Purchase of property, plant and equipment (261,690) (232,536)
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Net cash used in investing activities (239,365) (216,453)
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Cash flow from financing activities:
Increase (decrease) in bank overdrafts (132,704) 387,695
Proceeds from issuance of notes payable -- --
Principal reduction of notes payable (178,731) (144,449)
Reduction of long-term debt, unaffiliated lenders (344,685) (300,437)
Repurchase of treasury stock (7,065)
Proceeds from issuance of note payable to majority
shareholders -- 1,096,000
Unpaid interest added to note payable to majority
shareholders 104,529 195,528
--------- -----------
Net cash provided in financing activities (558,656) 1,234,337
--------- -----------
Net decrease in cash and cash equivalents -- --
--------- -----------
Cash and cash equivalents, beginning of period -- --
--------- -----------
Cash and cash equivalents, end of period $ -- $ --
========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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3CI COMPLETE COMPLIANCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)
(1) ORGANIZATION AND BASIS OF PRESENTATION
3CI Complete Compliance Corporation (the "Company" or "3CI"), a
Delaware corporation, is engaged in the collection, transportation and
incineration of biomedical waste in the southeastern and southwestern United
States. In February 1994, subsidiaries of 3CI acquired all the assets and
business operations of American Medical Transports Corporation ("AMTC"), an
Oklahoma corporation, and A/MED, Inc. ("A/MED"), a Delaware corporation. Both
AMTC and A/MED were engaged in businesses similar to that of 3CI. Waste
Systems, Inc. ("WSI"), a Delaware corporation, was the majority shareholder of
both AMTC and A/MED. Additionally, in February 1994, WSI purchased 1,255,182
shares of 3CI common stock ("Common Stock") from American Medical Technologies
("AMOT").
As a result of the transactions described above, WSI became the
majority shareholder of 3CI immediately following the acquisition of AMTC and
A/MED. For accounting purposes, AMTC and A/MED were considered the acquirer in
a reverse acquisition. The combined financial statements of AMTC and A/MED are
the historical financial statements of the Company for periods prior to the
date of the business acquisition. Historical combined shareholders' equity of
AMTC and A/MED has been retroactively restated for the equivalent number of
3CI shares received for the assets and business operations of AMTC and A/MED,
and the combined accumulated deficit of AMTC and A/MED has been carried
forward.
THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS HAVE BEEN PREPARED, WITHOUT
AUDIT, BY THE COMPANY PURSUANT TO THE RULES AND REGULATIONS OF THE SECURITIES
AND EXCHANGE COMMISSION. AS APPLICABLE UNDER SUCH REGULATIONS, CERTAIN
INFORMATION AND FOOTNOTE DISCLOSURES NORMALLY INCLUDED IN FINANCIAL STATEMENTS
PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES HAVE BEEN
CONDENSED OR OMITTED. THE COMPANY BELIEVES THAT THE PRESENTATION AND
DISCLOSURES HEREIN ARE ADEQUATE TO MAKE THE INFORMATION NOT MISLEADING AND THE
FINANCIAL STATEMENTS REFLECT ALL ADJUSTMENTS AND ARE OF A NORMAL RECURRING
NATURE WHICH ARE NECESSARY FOR A FAIR PRESENTATION OF THESE FINANCIAL
STATEMENTS. THESE FINANCIAL STATEMENTS SHOULD BE READ IN CONJUNCTION WITH THE
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED IN THE COMPANY'S ANNUAL REPORT
ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30, 1997, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
(2) NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share was computed by dividing net income
(loss) for each quarterly period by the weighted average number of common
shares outstanding for each period. In October 1994, the Company acquired
substantially all the assets and assumed certain liabilities of River Bay
Corporation ("River Bay"). The 565,500 shares that remain issued in connection
with the acquisition of River Bay have been excluded from weighted average
shares outstanding. In conjunction with the business acquisition with respect
to AMTC and A/MED the weighted average shares outstanding have been
retroactively restated for reverse acquisition accounting to reflect the
equivalent shares based on the conversion ratio established in the merger
transaction. The effect of stock options and warrants is antidilutive and is
therefore not considered in the calculation of net loss per common share.
(3) BUSINESS CONDITIONS
The Company has consistently suffered losses for the past several
fiscal years, and losses have continued in fiscal 1998. As of December 31,
1997, the Company has a working capital deficit of $6,476,395, but a positive
shareholders equity of $1,834,354. The Company has historically relied on
WSI, the Company's majority stockholder, for funding, and such support was
again necessary in fiscal 1997. In the absence of the Company being able to
secure third party financing, WSI agreed to provide the Company with a
Revolving Credit Facility of $8 million under the Promissory Note dated
September 30, 1995, which provides for deferred interest with cash advances not
to exceed $7.4
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million, of which $4.8 million including deferred interest and $4.9 million
including deferred interest has been drawn as of September 30, 1997, and
December 31, 1997. During the fiscal year ended September 30, 1996, WSI made
additional cash advances that have were in excess of the principal in the
original Promissory Note, and the Company entered into a second Revolving
Credit Facility of $2.7 million including deferred interest, dated December 20,
1996 with a maturity date of February 28, 1997. It is the intent of WSI and
3CI that this Promissory Note shall evidence all sums owing by 3CI to WSI to
the extent that such sums represent advances of funds to 3CI in excess of the
maximum limits fixed under that certain $8,000,000 Promissory Note dated
September 30, 1995. The Promissory Note dated September 30, 1995 had a due
date of December 31, 1996 of which the Company has requested from and received
an extension to discuss with WSI the possibility of restructuring the terms of
such Promissory Note. In February 1997, the Company received a letter from the
NASDAQ Stock Market, Inc. regarding the Company's failure to meet listing
requirements. These requirements include maintaining a minimum capital and
surplus of at least $1,000,000 and a minimum bid price of $1.00. While the
Company remained out of compliance with these requirements, the NASDAQ Stock
Market, Inc. allowed the Company to remain listed with an exception added to
its trading symbol. The NASDAQ Stock Market, Inc. gave the Company until June
25, 1997, to meet the listing requirements. In June 1997, WSI converted
$7,000,000 of debt into 1,000,000 shares of 3CI preferred stock. This
conversion allowed the Company to meet the listing requirements of the NASDAQ
Stock Market, Inc. On June 26, 1997, the NASDAQ Stock Market, Inc. informed
the Company that it had been found to be in compliance with all requirements
necessary to for continued listing on the exchange, the exception to its
trading symbol had been removed. In connection with the conversion of debt to
preferred stock, WSI canceled the Revolving Credit Facility of $2.7 million
dated December 20, 1996, with a maturity date of February 28, 1997, which had
been previously extended to June 30, 1997. The conversion has also resulted in
the reduction of the outstanding indebtedness of the Promissory Note dated
September 30, 1995. During the fiscal years ended September 30, 1997, 1996 and
1995 WSI has made cash advances to the Company of $2,303,000, $4,000,000 and
$4,100,000. Since the year ended September 30, 1997, the Company has not
requested nor received any cash advances from WSI. WSI is under no obligation
to provide additional advances and could demand payment on the debt at any
time. During the fiscal year of 1997 and continuing into fiscal 1998, the
Company has begun to have discussions with third party lenders to obtain an
alternative source of financing apart from WSI. In the event the Company and
WSI do not come to a resolution on the restructuring of the September 30, 1995
Promissory Note and the Company is unable to obtain alternative financing,
there can be no assurance that the Company will be able to meet its obligations
as they become due or realize the recorded value of its assets and would likely
be forced to seek bankruptcy protection.
The nature and level of competition in this industry have remained at
a high level for several years. This condition has produced aggressive price
competition and results in pressure on profit margins. The Company competes
against companies which may have access to greater capital resources. In order
to compete in this industry on a long- term basis and fully realize its
business strategy, the Company will require additional and continued financing
and other assistance from its current shareholders and if available, from
outside sources. There is no assurance that adequate funds for these purposes
will be available when needed or, if available, on terms acceptable to the
Company.
(4) COMMITMENTS AND CONTINGENCIES
In May 1995, a group of minority stockholders of the Company, including
Patrick Grafton, former Chief Executive Officer of the Company, acting
individually and purportedly on behalf of all minority stockholders, and on
behalf of the Company, filed suit in James T. Rash, et al v. Waste Systems,
Inc., et al, No. 95-024912 in the District Court of Harris County, Texas, 129th
Judicial District, against the Company, WSI and various directors of the
Company. The plaintiffs have alleged minority stockholder oppression, breach
of fiduciary duty, breach of contract and "thwarting of reasonable
expectations," and have demanded an accounting, appointment of a receiver for
the sale of the Company, unspecified actual damages and punitive damages of $10
million, plus attorney's fees. In addition, Mr. Grafton has alleged
unspecified damages as a result of his removal as an officer and director of
the Company and the Company's failure to renew his employment agreement in
March 1995, that such removal was wrongful and ineffective. The Company's
insurer has denied coverage in the lawsuit. The Company has denied all
material allegations of the lawsuit and believes that the resolution of this
matter, including attorneys fees incurred in the Company's defense could have a
material adverse effect on the Company's financial condition. However, the
outcome of this cannot be predicted, and
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an adverse decision in the lawsuit would likely have a material adverse effect
on the Company's financial condition and results of operations and cash flows.
The Company has reached an agreement in principle with some, but not all, of
the plaintiffs for the settlement of this action. The execution of the
appropriate documentation to evidence this settlement has been completed and
both parties are awaiting court approval which is set for late February 1998.
The Company and Mr. Grafton reached a settlement of Mr. Grafton's individual
claims relating to his removal as an officer and director of the Company. The
terms of the settlement reached between the Company and Mr. Grafton are
confidential to both parties. The Company accrued an amount in its fiscal year
ended 1996 and 1995 financial statements which closely approximates the actual
settlement.
In June 1995, the former stockholders of Med-Waste Disposal Service,
Inc. ("Med-Waste") filed suit in James H. Shepherd, et al v. 3CI Complete
Compliance Corporation, et al, No. C.V.-95-1441-1 in the Circuit Court of Hot
Springs County, Arkansas, against the Company and various current and former
officers and directors of the Company. Plaintiffs have alleged violations of
federal and state securities laws, breach of contract, common law fraud and
negligence in connection with the acquisition of Med-Waste by the Company, and
have demanded rescission, restitution, unspecified actual damages and punitive
damages of $10 million, plus attorneys' fees. The case was transferred to the
United States District Court of the Western District of Arkansas, Hot Springs
Division and in November 1996 was subsequently transferred to the United States
District Court for the Western District of Louisiana. The parties, other than
Patrick Grafton, former Chief Executive Officer of the Company, have agreed to
settle the suit in consideration of the issuance by the Company to the
plaintiffs of 250,000 shares of Common Stock and the payment by the Company to
the plaintiffs of 20% to 55% of the pre-tax profits, as defined, attributable
to the assets previously acquired from Med-Waste until such time as the shares
of Common Stock held by the plaintiffs become freely tradable and the market
price of the Common Stock averages at least $2.50 per share over a period of 42
consecutive days. In addition, the Company and WSI have agreed to repurchase
the shares of Common Stock held by the plaintiffs for $2.50 per share in
certain events, including the bankruptcy of the Company or in the event WSI
ceases to be the largest beneficial holder of the Common Stock. The
obligations of the Company to the plaintiffs are secured by a security interest
in most of the assets of the Company, and WSI has agreed to subordinate its
loans to the Company, and all related security interests, to the obligations,
and the related security interests, of the Company to the plaintiffs. This
matter has been settled by the parties and was dismissed in its entirety on
July 31, 1997, by order of the court.
In connection with an auto accident in July 1996, two suits have been
filed against the Company. Ryan O'Neil Youmans & Anita Youmans v. American
3CI, et al, No. CV9604899, was filed in the Circuit Court of Jefferson County,
Alabama, in August 1996. Jimmy R. Whitfield & Rhonda Whitfield v. Paul
Bronger, American 3CI, et al., No. CV-96-847, was filed in the Circuit Court of
Shelby County, Alabama in November of 1996. These proceedings have been
settled by the Company's insurance carrier and the related expenditure to the
Company are reflected in the current year financial statements. The resolution
to these lawsuits did not a material effect on the Company's financial
condition, results of operations and cash flows.
On or about March 10, 1997, the Company commenced arbitration
proceedings before the American Arbitration Association in Houston, Texas,
against River Bay Corporation ("River Bay") and Marlan Baucum seeking to set
aside a Purchase Agreement (the "Purchase Agreement") entered into between
those parties on or about October 10, 1994, together with ancillary agreements
pertaining thereto. The company was seeking damages and/or to set aside the
Purchase Agreement and collateral agreements, including a Put Option Agreement
(the "Put Option Agreement") which, if otherwise enforceable, would require the
payment by the Company of approximately $1,700,000 for 565,500 shares of 3CI
common stock. In response, on April 9, 1997, Bank of Raleigh and Smith County
Bank, assignees of certain rights under the Purchase Agreement, commenced a
complaint for a declaratory and monetary relief in the U.S. District Court for
the Southern District of Mississippi, Jackson, Division in Civil Action No.
3:97cv249BN. The Bank of Raleigh and Smith County Bank have prayed declaratory
judgment declaring the arbitration provision in the Purchase Agreement to be
not binding upon the said banks,the claims of 3CI against River Bay to be
subordinate to the claims of the banks, unspecified compensatory damages and
punitive damages for least $1,000,000. In this action the Bank of Raleigh and
Smith County Bank proceeded to collect the Company's accounts receivable in the
River Bay division as it was used as collateral in the Purchase Agreement, they
collected approximately $463,000, through October 14,
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1997. On or about May 10, 1997, the Company filed a Petition of Arbitration
in Suit No. 422,107 of the First Judicial District Court, Caddo Parish,
Louisiana, naming River Bay and Marlan Baucum as defendants therein. This
lawsuit seeks an injunction and stay of all judicial and extra-judicial
proceedings pursuant to the Put Option Agreement until such time as the
arbitration is completed. This action was removed by the defendants to the
U.S. District Court for the Western District of Louisiana, Shreveport Division
in Civil Action No. 97-0578. The parties have agreed to settle the suit in
consideration of the Company repurchasing the remaining 565,500 shares of
Common Stock related to the Put Option Agreement. The outcome of this lawsuit
will not have a material adverse effect on the Company's financial position,
result of operations and net cash flows.
The Company is subject to certain other litigation and claims arising in
the ordinary course of business. In the opinion of management of the Company,
the amounts ultimately payable, if any, as a result of such litigation and
claims will not have a materially adverse effect on the Company's financial
position, results of operations, and net cash flows.
The Company operates within the regulated medical waste disposal
industry which is subject to intense governmental regulation at the federal,
state and local levels. The Company believes it is currently in compliance in
all material respects with all applicable laws and regulations governing the
medical waste disposal business. However, continuing expenditures may be
required in order for the Company to remain in compliance with existing and
changing regulations. Furthermore, because the medical waste disposal industry
is predicated upon the existence of strict governmental regulation, any
material relaxation of regulatory requirements governing medical waste disposal
or of their enforcement could result in a reduced demand for the Company's
services and have a material adverse effect on the Company's revenues and
financial condition. The scope and duration of existing and future regulations
affecting the medical waste disposal industry cannot be anticipated and are
subject to changing political and economic pressures.
9
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following summarizes (in thousands) the Company's operations:
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------
1997 1996
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<S> <C> <C>
Revenues $ 4,600 $ 4,674
Cost of services 3,437 3,500
Depreciation and amortization 295 358
Selling, General, and
Administrative Expense 768 837
Net Income (loss) from operations 100 (21)
Other Income (expense), net (223) (324)
Net income (loss) (123) (345)
</TABLE>
THREE MONTHS ENDED DECEMBER 31, 1997 COMPARED TO THREE MONTHS ENDED DECEMBER 31,
1996:
Revenues:
Revenues for the three month period ended December 31, 1997, decreased to
$4,673,658 from revenues for the three month period ended December 31, 1996 of
$4,743,054. This decrease in revenue of $73,124 or 1.6%, is primarily
attributable to a reduction in third party incineration revenue. During the
quarter the Company increased its direct collection revenue by 2.4%, while
reducing the dependency of outside third party providers by 3.8%. The industry
continues to experience a downward pressure in pricing caused by competitors
attempting to gain market share through deep discount pricing.
COSTS OF SERVICES:
Cost of services decreased $62,792, or 1.8%, to $3,437,167 for the three month
period ended December 31, 1997, compared to $3,499,959 for the three month
period ended December 31, 1996. The decrease was due to lower transportation
costs (a reduction of $8,763), the Company's reduced dependence on third party
incineration facilities (a reduction of $44,782) and the conversion of existing
large customers from cardboard containers to multi-use reusable containers (a
reduction of $9,247).
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A"):
Selling, general and administrative expenses for the three month period ended
December 31, 1997 decreased to $767,959 compared to $836,970 for the three
month period ended December 31, 1996. The $69,011 decrease was due to lower
salaries (a reduction of $13,015), contract labor (a reduction of $41,573), and
employee overtime (a reduction of $14,423). As a percentage of revenue, the
expenses for the 1997 period improved to 16.7% compared to 17.9% for the period
ended December 31, 1996.
DEPRECIATION AND AMORTIZATION expense for the three months ended December 31,
1997 decreased to $294,979 compared to $357,923 for the three months ended
December 31, 1996.
INTEREST EXPENSE decreased to $149,624 for the three month period ended December
31, 1997 from $250,620 for the three month ended December 31, 1996, primarily
due to the debt conversion of the majority shareholders promissory note to
preferred shares, as described in the financing activities.
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LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES:
The Company anticipates a working cash deficit from operations for the remainder
of fiscal year 1997 and will be dependent upon WSI to fund its continued
operations. However, no assurance can be given that WSI will continue to advance
funds to the Company and to forego demand for payment of the current
indebtedness of the Company to WSI. In the event that WSI fails to advance
required funds to the Company or demands payment of current indebtedness, the
Company would have limited financing sources and would likely be forced to seek
bankruptcy protection.
INVESTING ACTIVITIES:
During the first fiscal quarter 1998, the Company invested $262,000 for
transportation, machinery and equipment, computer equipment and software, and
other fixed assets.
FINANCING ACTIVITIES:
The Company has historically funded its operations, acquisitions and debt
service through cash advances from WSI. During fiscal 1994, advances of
$3,100,000 and $4,671,973 were converted to 666,670 and 1,557,324 shares of
common stock. As a result of its prior expansion and program of acquisitions,
the Company has experienced liquidity deficiencies.
In October 1994, WSI made a non-interest bearing cash advance of $1,000,000 to
the Company, which was converted into 416,667 shares of Common Stock in April
1995. In the first half of 1995, WSI made non-interest bearing cash advances
totaling $4,100,000 to the Company. In June 1995, the Company executed a
$6,000,000 revolving promissory note, which was utilized in part to repay the
advances. This note was renegotiated in September 1995, increasing the total
available to $8,000,000 including interest, with principal not to exceed
$7,400,000. The note bears interest at the prime rate and was payable on
December 31, 1996. Interest is payable in quarterly installments which is
automatically added to the outstanding principal balance, if not paid. As of
September 30, 1997, 1996, and 1995, the Company has borrowed $4,844,217,
$8,843,000 and $4,100,000 respectively under the note. See note 5 to Notes to
Consolidated Financial Statements. As a significant amount of the advances from
WSI have historically been non interest bearing, some of which were ultimately
converted to equity, interest expense in 1997 and 1996 has increased
significantly as a result of the advances made pursuant to the interest bearing
note.
During the fiscal year of 1996, the Company received cash advances in excess of
the Promissory Note dated September 30, 1995. Due to the additional cash
advances that were made in excess of the principal in the original promissory
note, the Company entered into a second Revolving Credit Facility of $2.7
million including deferred interest, dated December 20, 1996 with maturity date
of February 28, 1997. It is the intent of WSI and 3CI that this Revolving
Promissory Note shall evidence all sums owing by 3CI to WSI to the extent that
such sums represent advances of funds by 3CI in excess of the maximum limits
fixed under that certain $8,000,000 Revolving Promissory Note dated September
30, 1995. The Promissory Note dated September 30, 1995 had a due date of
December 31, 1996, of which the Company has requested each month a waiver and
extension of this note repayment to restructure the terms of the Revolving
Promissory Note. In February 1997, the Company received a letter from the NASDAQ
Stock Market, Inc. regarding the Company's failure to meet listing requirements.
These requirements include maintaining a minimum capital and surplus of at least
11
<PAGE> 12
$1,000,000 and a minimum bid price of $1.00. While the Company remained out of
compliance with this requirement, the NASDAQ allowed the Company to remain
listed with an exception added to it's trading symbol. The NASDAQ Stock Market
gave the Company until June 25, 1997, to meet the listing requirement. In June
1997, WSI converted $7,000,000 of debt into 1,000,000 shares of 3CI preferred
stock. This conversion allowed the Company to meet the listing requirement of
the NASDAQ Stock Market, Inc. On June 26, 1997, the NASDAQ Stock Market Inc. has
informed the Company that has been found to be in compliance with all
requirements necessary to for continued listing on the exchange, the exception
to it's trading symbol has been removed. In connection with the conversion of
debt to preferred stock, WSI cancelled the Revolving Credit Facility of $2.7
million dated December 20, 1996, with a maturity date of February 28, 1997,
which had been previously extended to June 30, 1997. The conversion has also
resulted in the reduction of the outstanding indebtedness of the Promissory Note
dated September 30, 1995. During the fiscal years ended September 30, 1997, 1996
and 1995 WSI has made cash advances to the Company of $2,303,000, $4,000,000 and
$4,100,000. Since the fiscal year ended September 30, 1997 and continuing into
the first quarter ending December 31, 1997, the Company has not requested nor
received any cash advances from WSI. As the Company, has not been able to repay
its' indebtedness to WSI as per the original Promissory Note dated September 30,
1995, it has requested and received extensions and waivers on a monthly basis
from WSI, so that the Company and WSI could restructure the Promissory Note. WSI
is under no obligation to provide additional advances and could demand payment
on the debt at any time. During the fiscal year of 1997 and into the fiscal year
1998, the Company has begun to have discussions with third party lenders to
obtain an alternative source of financing apart from WSI. In the event the
Company and WSI do not come to a resolution on the restructuring of the note and
the Company is unable to obtain alternative financing, there can be no assurance
that the Company will be able to meet its obligations as they become due or
realize the recorded value of its assets and would likely be forced to seek
bankruptcy protection. During the first quarter ending December 31, 1997, the
Company has repaid approximately $179,731 of its notes payable and approximately
$344,685 of its long-term debt that became due during the quarter. During the
first quarter of the fiscal year 1998, the Board of Directors of the Company
authorized the repurchase of up to 150,000 shares of 3CI common stock from time
to time in the open market. Since the authorization by the board of Directors,
the Company has repurchased 3,000 shares at cost of $4,065 as of December 31,
1997, and an additional 3,000 shares for $3,042 as of February 9, 1998.
The nature and level of competition in the medical waste industry has remained
high for several years. This condition has produced aggressive price competition
and results in pressures on profit margins. The Company competes against
companies which have access to greater capital resources. In order to compete in
this industry on a long-term basis and fully realize its business strategy, the
Company will require additional and continued financing and other assistance
from its current majority shareholder and if available, from outside sources.
There is no assurance that adequate funds for these purposes will be available
when needed or, if available, on terms acceptable to the Company.
12
<PAGE> 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -
In May 1995, a group of minority stockholders of the Company, including Patrick
Grafton, former Chief Executive Officer of the Company, acting individually and
purportedly on behalf of all minority stockholders, and on behalf of the
Company, filed suit in James T. Rash, et al v. Waste Systems, Inc., et al, No.
95-024912 in the District Court of Harris County, Texas, 129th Judicial
District, against the Company, WSI and various directors of the Company. The
plaintiffs have alleged minority stockholder oppression, breach of fiduciary
duty and breach of contract and "thwarting of reasonable expectations" and have
demanded an accounting, appointment of a receiver for the sale of the Company,
unspecified actual damages and punitive damages of $10 million, plus attorney's
fees. In addition, Mr. Grafton has alleged unspecified damages as a result of
his removal as an officer and director of the Company and the Company's failure
to renew his employment agreement in March 1995 and has alleged that such
removal was wrongful and ineffective. The Company's insurer has denied coverage
in the lawsuit. The Company has denied all material allegations of the lawsuit
and believes it has adequately reserved for all potential losses related to
these matters. However, the outcome of this minority shareholder litigation
cannot be predicted, and an adverse decision in the lawsuit would likely have a
material adverse effect on the Company's financial condition and results of
operations and cash flows. The Company has reached an agreement in principle
with some, but not all, with the plaintiffs for the settlement of this action.
The execution of the appropriate documentation to evidence this settlement has
been completed and both parties are awaiting court approval. The Company and Mr.
Grafton reached a settlement of Mr. Grafton's individual claims relating to his
removal as an officer and director of the Company. The terms of the settlement
reached between the Company and Mr. Grafton are confidential to both parties.
The Company accrued an amount in the fiscal year ended 1995 financial statements
which closely approximates the actual settlement agreement.
In June 1995, the former stockholders of Med-Waste filed suit in James H.
Shepherd, et al v. 3CI Complete Compliance Corporation, et al, No.
C.V.-95-1441-1 in the Circuit Court of Hot Spring County, Arkansas, against the
Company and various current and former officers and directors of the Company.
Plaintiffs have alleged violations of federal and state securities laws, breach
of contract, common law fraud and negligence in connection with the acquisition
of Med-Waste by the Company and have demanded rescission, restitution,
unspecified actual damages and punitive damages of $10 million, plus attorney's
fees. The case was transferred to the United States District Court of the
Western District of Arkansas, Hot Springs Division and in November 1996 was
subsequently transferred to the United States District Court for the Western
District of Louisiana. The parties, other than Patrick Grafton, former Chief
Executive Officer of the Company, have agreed to settle the suit in
consideration for the issuance by the Company to the plaintiffs of 250,000
shares of Common Stock and the payment by the Company to the plaintiffs of 20%
to 55% of the pre-tax profits, as defined, attributable to the assets previously
acquired from Med-Waste until such time as the shares of Common Stock held by
the plaintiffs become freely tradable and the market price of the Common Stock
averages at least $2.50 over a period of 42 consecutive days. In addition, the
Company and WSI have agreed to repurchase the shares of Common Stock held by the
plaintiffs for $2.50 per share in certain events, including the bankruptcy of
the Company or in the event WSI ceases to be the largest beneficial holder of
the Common Stock. The obligations of the Company to the plaintiffs are secured
by a security interest in most of the assets of the Company, and WSI has agreed
to subordinate its loans to the Company, and all related security interests, to
the obligations, and the related security interests, of the Company to the
plaintiffs. This matter has been settles and was dismissed in its entirety on
July 31, 1997, by order of the court. During the fiscal years ended September
30, 1996 and 1997, the Company has made payments totaling approximately $193,000
and $248,000, respectively, to the plaintiffs, related to this agreement.
13
<PAGE> 14
In connection with an auto accident in July 1996, two suits have been filed
against the Company. Ryan O'Neil Youmans & Anita Youmans v. American 3CI, et al,
No. CV9604899, was filed in the Circuit Court of Jefferson County, Alabama, in
August 1996. Jimmy R. Whitfield & Rhonda Whitfield v. Paul Bronger, American
3CI, et al. No. CV-96-847, was filed in the Circuit Court of Shelby County,
Alabama in November of 1996. These proceedings have been settled by the
Company's insurance carrier and the related expenditure to the Company are
reflected in the current year financial statements. The resolution to these
lawsuits did not a material effect on the Company's financial condition, results
of operations and cash flows.
On or about March 10, 1997, the Company commenced arbitration proceedings before
the American Arbitration Association in Houston, Texas, against River Bay
Corporation and Marlan Baucum. The Company was seeking damages and/or to set
aside the Purchase Agreement (the "Purchase Agreement")and ancillary agreements,
including a Put Option Agreement (the "Put Option Agreement") entered in
connection with the acquisition of assets from River Bay Corporation. If
otherwise enforceable, the Put Option Agreement would have required the payment
by the Company of approximately $1,700,000 for 565,500 shares of 3CI common
stock. The arbitration proceeding was subsequently amended to include the Bank
of Raleigh and Smith County Bank, assignees of certain rights under the Purchase
Agreement, because through an independent legal action such banks were able to
collect approximately $463,000 of the Company's accounts receivable that were
used as collateral under the Purchase Agreement. In settlement of the
arbitration, the Company agreed to repurchase the remaining 565,500 shares of
common stock in consideration of $861,000, of which, $100,000 was payable
immediately and $761,000 is payable in monthly installments of $63,450, with the
final payment due December 1, 1998.
The Company is subject to certain other litigation and claims arising in the
ordinary course of business. In the opinion of management of the Company, the
amounts ultimately payable, if any, as a result of such claims and assessments
will not have materially adverse effect on the Company's financial position,
result of operations or net cash flows except where noted above.
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
14
<PAGE> 15
Item 6. Exhibits and Reports on Form 8-k
(a) EXHIBITS
Except as otherwise indicated, the following documents are incorporated
by reference as Exhibits to this Report (as used in the following
listing, "3CI" refers to the Company):
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2.1. Copy of Agreement of Purchase and Sale dated as of June
27, 1991 by, between and among American Medical
Technologies, Inc., Harry Argovitz, et ux, Complete
Compliance Corporation and 3CI Transportation Systems
Corporation, as amended by the First Amendment thereto
dated as of September 3, 1991 and the Second Amendment
thereto dated as of October 7, 1991 (incorporated by
reference to Exhibit 10(a) of 3CI's registration
statement on Form S-1 (No. 33-45632) effective April 14,
1992).
2.2. Copy of Blanket Conveyance, Bill of Sale and Assignment
dated as of September 6, 1991 executed and delivered by
American Medical Technologies, Inc., in favor of 3CI
(incorporated by reference to Exhibit 10(o) of 3CI's
registration statement on Form S-1 (No. 33-45632)
effective April 14, 1992).
2.3. Copy of Asset Purchase Agreement dated as of December 10,
1991 between 3CI, MedCon, Inc., and Harry S. Allen,
individually and as sole shareholder of MedCon, Inc.
(incorporated by reference to Exhibit 10(d) of 3CI's
registration statement on Form S-1 (No. 33-45632)
effective April 14, 1992).
2.4. Copy of First Amendment dated March 26, 1992 to Asset
Purchase Agreement by, and between and among, MedCon,
Inc., Harry S. Allen, as sole shareholder of MedCon,
Inc., and 3CI (incorporated by reference to Exhibit 10(n)
of 3CI's registration statement on Form S-1 (No.
33-45632) effective April 14, 1992).
2.5. Copy of Second Amendment dated May 22, 1992 to Asset
Purchase Agreement by, between and among MedCon, Inc.,
Harry S. Allen, as the sole shareholder of MedCon, Inc.
and 3CI (incorporated by reference to Exhibit 2.6 of
3CI's Annual Report on Form 10-K for the fiscal year
ended September 30, 1992).
15
<PAGE> 16
2.6. Copy of Third Amendment dated October, 1992 to Asset
Purchase Agreement by, between and among MedCon, Inc.,
Harry S. Allen, as sole shareholder of MedCon, Inc. and
3CI (incorporated by reference to Exhibit 2.7 of 3CI's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1992).
2.7. Purchase Agreement and Plan of Reorganization dated
February 4, 1994, among A/MED, Inc, 3CI Complete
Compliance Corporation and 3CI Acquisition Corp./A/MED
(incorporated by reference to Exhibit 1.1 of 3CI's report
on Form 8-K filed February 7, 1994).
2.8. Purchase Agreement and Plan of Reorganization dated
February 4, 1994, among A/Med, Inc., 3CI Complete
Compliance Corporation and 3CI Acquisition Corp./A/MED
(incorporated by reference to Exhibit 1.2 of 3CI's report
on Form 8-K filed February 7, 1994).
2.9. Stock Purchase Agreement dated February 4, 1995, between
Waste Systems, Inc. and 3CI Complete Compliance
Corporation (incorporated by reference to Exhibit 1.3 of
3CI's report on Form 8-K filed February 7, 1994).
2.10. Purchase Agreement dated October 10, 1994, among 3CI
Complete Compliance Corporation, River Bay Corporation
and Marlan Baucum (incorporated by reference to Exhibit
1.1 of 3CI's report on Form 8-K filed October 27, 1994).
2.11. Addendum to Purchase Agreement dated October 12, 1994,
among 3CI Complete Compliance Corporation, River Bay
Corporation and Marlan Baucum. (incorporated by reference
to Exhibit 1.2 of 3CI's report on Form 8-K filed October
27, 1994).
2.12. Assumption of Liabilities dated October 10, 1994, among
3CI Complete Compliance Corporation, 3CI Acquisition
Corp./A/MED, Marlan Baucum and River Bay Corporation.
(incorporated by reference to Exhibit 1.11 of 3CI's
report on Form 8-k filed October 27, 1994).
2.13. Plan of Reorganization and Acquisition Agreement dated
August 9, 1994, among the 3CI, Med-Waste Disposal
Service, Inc., Jim Shepherd, Mike Shepherd and Richard
McElhannon (incorporated by reference to Exhibit 2.14 of
3CI's Annual Report on Form 10-K for the fiscal year
ended September 30, 1992).
3.1. Copy of 3CI's Certificate of Incorporation as amended
(incorporated by reference to Exhibit 3(a) of 3CI's
registration statement on Form S-1 (No. 33-45632)
effective April 14, 1992).
3.2. Copy of 3CI's Certificate of Incorporation, as amended
effective June 13, 1995 (incorporated by reference to
Exhibit 3.1 of 3CI's Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1995).
16
<PAGE> 17
3.3. Copy of 3CI's Bylaws, as amended (incorporated by
reference to Exhibit 3(b) of 3CI's registration statement
on Form S-1 (No. 33-45632) effective April 14, 1992).
3.4. Copy of 3CI's Bylaws, as amended effective May 14, 1995
(incorporated by reference to Exhibit 3.2 of 3CI's
Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1995).
4.1. Copy of Representative Warrant Agreement dated as of
April 14, 1992 (incorporated by reference to Exhibit 4(b)
of 3CI's registration statement on Form S-1 (No.
33-45632) effective April 14, 1992).
4.2. Copy of Promissory Note of the Company dated January 13,
1993, in the principal amount of $200,000, bearing
interest payable quarterly at payee's prime rate plus 1%
payable on or before January 15, 1995, to the order of
Midlantic National Bank with payment of principal subject
to the conditions specified in Paragraph 14 of said
promissory note (incorporated by reference to Exhibit
4.2. of 3CI's Annual Report on Form 10-K for the fiscal
year ended September 30, 1992).
4.3. Copy of Deed of Trust, Assignment, Security Agreement and
Financing Statement dated January 13, 1993, granted and
delivered by the Company in favor of Midlantic National
Bank to secure the Company's promissory note of even date
referred to in Exhibit 4.2. immediately above
(incorporated by reference to Exhibit 4.3. of 3CI's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1992).
4.4. Copy of Warrant No. 3CI-01 issued to James T. Rash
providing for the purchase on or before December 31, 1996
of 50,000 warrants of the common stock of 3CI at a
purchase price of $3.00 per share, subject to adjustment
as therein provided (incorporated by reference to Exhibit
4.4 of 3CI's Annual Report on Form 10-K for the fiscal
year ended September 30, 1993).
4.5. Copy of Warrant No. 3CI-02 issued to Leonard A. Bedell
providing for the purchase on or before December 31, 1996
of 50,000 warrants of the common stock of 3CI at a
purchase price of $3.00 per share, subject to adjustment
as therein provided. (incorporated by reference to
Exhibit 4.5 of 3CI's Annual Report on Form 10-K for the
fiscal year ended September 30, 1993).
4.6. Put Option Agreement dated October 10, 1994, among 3CI
Complete Compliance Corporation, River Bay Corporation
and Marlan Baucum (incorporated by reference to Exhibit
1.3 of 3CI's report on Form 8-K filed October 27, 1994).
4.7. Stock Pledge Agreement dated October 10, 1994, between
3CI Complete Compliance Corporation and River Bay
Corporation (incorporated by reference to Exhibit 1.4 of
3CI's report on Form 8-K filed October 27, 1994).
17
<PAGE> 18
4.8. Stock Escrow and Pledge Agreement dated July 1994, among
3CI, Med-Waste Disposal Service, Inc., Jim Shepherd, Mike
Shepherd and Richard McElhannon (incorporated by
reference to Exhibit 4.11 of 3CI's Annual Report on Form
10-K for the fiscal year ended September 30, 1992).
4.9. Copy of Revolving Promissory Note dated June 1, 1995, in
the principal amount of $6,000,000 between 3CI and WSI,
its majority shareholder (incorporated by reference to
Exhibit 4.1 of 3CI's Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1995).
4.10. Copy of Revolving Promissory Note dated September 1, 1995
in the principal amount of $6,000,000 between 3CI and
WSI, its majority shareholder (incorporated by reference
to Exhibit 4.2 of 3CI's quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1995).
4.11. Copy of Revolving Promissory Note dated September 30,
1995 in the principal amount of $8,000,000 between 3CI
and WSI, its majority shareholder.
4.12. Copy of Revolving Promissory Note dated December 20, 1996
in the principal amount of $2,700,000 between 3CI and
WSI, its majority shareholder.
4.13. Copy of extension of Revolving Promissory Note dated
December 30, 1996 in the principal amount of $8,000,000
between 3CI and WSI, its majority shareholder.
10.1. Copy of Contract dated August 22, 1989 between 3CI and
the City of Carthage, Texas, related to the incineration
of medical waste (incorporated by reference to Exhibit 10
of 3CI's registration statement on Form S-1 (No.
33-45632) effective April 14, 1992).
10.2. Copy of Addendum dated March 30, 1992 to Contract between
3CI and the City of Carthage, Texas (incorporated by
reference to Exhibit 10 (p) of 3CI's registration
statement on Form S-1 (No. 33-45632) effective April 14,
1992).
10.3. Copy of First Amendment dated July, 1993 to Contract
between 3CI and City of Carthage, Texas (incorporated by
reference to Exhibit 10.3 of 3CI's Annual Report on Form
10-K for the fiscal year ended September 30, 1993).
10.4. Copy of Contract dated August, 1989, between 3CI and the
City of Center, Texas, related to the incineration of
medical waste (incorporated by reference to Exhibit 10
(b) of 3CI's registration statement on Form S-1 (No.
33-45632) effective April 14, 1992).
10.5. Copy of form of Amendment No. 1 dated October 12, 1992 to
the contract dated August, 1989, between 3CI and the City
of Center, Texas, related to the incineration of medical
waste (incorporated by reference to Exhibit 10.5. of
3CI's Annual Report on Form 10-K for the fiscal year
ended September 30, 1993).
18
<PAGE> 19
10.6. Copy of form of Amendment No. 2 dated December 29, 1992
to the contract dated August, 1989, between 3CI and the
City of Center, Texas, related to the incineration of
medical waste (incorporated by reference to Exhibit 10.6.
of 3CI's Annual Report on Form 10-K for the fiscal year
ended September 30, 1993).
10.7. Copy of form of Amendment No. 3 dated December, 1993 to
the contract dated August, 1989, between 3CI and the City
of Center, Texas, related to the incineration of medical
waste (incorporated by reference to Exhibit 10.7. of
3CI's Annual Report on Form 10-K for the fiscal year
ended September 30, 1993).
10.8. Copy of Termination Agreement, dated as of May 20, 1993,
between 3CI, Micro-Waste Corporation and the shareholders
of Micro-Waste Corporation (incorporated by reference to
Exhibit 10.17. of 3CI's Annual Report on Form 10-K for
the fiscal year ended September 30, 1993).
10.9. Copy of 1992 Stock Option Plan of 3CI (incorporated by
reference to Exhibit 10(m) of 3CI's registration
statement on Form S-1 (No. 33-45632) effective April 14,
1992).
10.10. Promissory Note dated October 10, 1994, among 3CI
Complete Compliance Corporation, 3CI Acquisition
Corp./A/MED and River Bay Corporation (incorporated by
reference to Exhibit 1.5 of 3CI's report on Form 8-k
filed October 27, 1994).
10.11. Promissory Note dated October 10, 1994, between 3CI
Complete Compliance Corporation and River Bay
(incorporated by reference to Exhibit 1.6 of 3CI's report
on Form 8-K filed October 27, 1994).
10.12. Security Agreement dated October 10, 1994, among 3CI
Complete Compliance Corporation, 3CI Acquisition
Corp./A/MED and River Bay (incorporated by reference to
Exhibit 1.7 of 3CI's report on Form 8-K filed October 27,
1994).
10.13. Security Agreement dated October 10, 1994, between 3CI
Complete Compliance Corporation and River Bay Corporation
(incorporated by reference to Exhibit 1.8 of 3CI's report
on Form 8-K filed October 27, 1994).
10.14. Mortgage, Security Agreement, Assignment of Leases and
Financing Statement dated October 10, 1994, among 3CI
Complete Compliance Corporation, 3CI Acquisition Corp.,
A/A/MED and River Bay Corporation (incorporated by
reference to Exhibit 1.9 of 3CI's report on Form 8-K
filed October 27, 1994).
10.15. Debt Subordination Agreement dated October 10, 1994,
among 3CI Complete Compliance Corporation, 3CI
Acquisition Corp./A/MED, River Bay Corporation, Marlan
Baucum, Zeb Baucum, III, Diedra Baucum, The Smith County
Bank and the Bank of Raleigh (incorporated by reference
to Exhibit 1.10 of 3CI's report on Form 8-K filed October
27, 1994).
19
<PAGE> 20
Item 6. Exhibits and Reports on Form 8-K
10.16. Non-Competition Agreement dated October 10, 1994, between
3CI Complete Compliance Corporation and Marlan Baucum
(incorporated by reference to Exhibit 1.12 of 3CI's
report on Form 8-K filed October 27, 1994).
10.17. Employment Agreement dated October 10, 1994, between 3CI
Complete Compliance Corporation and Zeb Baucum
(incorporated by reference to Exhibit 1.13 of 3CI's
report on Form 8-K filed October 27, 1994).
10.18. Consultant Agreement dated October 10, 1994, between 3CI
Complete Compliance Corporation and Marlan Baucum
(incorporated by reference to Exhibit 1.14 of 3CI's
report on Form 8-K filed October 27, 1994).
10.19. Employment Agreement dated May 20, 1994, between 3CI and
Patrick Grafton (incorporated by reference to Exhibit
10.19 of 3CI's Annual Report on Form 10-K for the fiscal
year ended September 30, 1992).
10.20. Employment Agreement dated May 20, 1994, between 3CI and
Charles Crochet (incorporated by reference to Exhibit
10.20 of 3CI's Annual Report on Form 10-K for the fiscal
year ended September 30, 1992).
10.21. Employment Agreement dated August 31, 1995, between 3CI
and Charles D. Crochet.
10.22. Modification of Purchase Transaction dated January 25,
1995, among 3CI, 3CI Acquisition Corp./A/MED, River Bay
Corporation and Marlan Baucum (incorporated by reference
to Exhibit 10.21 of 3CI's Annual Report on Form 10-K for
the fiscal year ended September 30, 1995).
10.23. Settlement Agreement dated January 1996 between James
Shepherd, Michael Shepherd and Richard T. McElhannon as
Releassors, and the Company, Georg Rethmann, Dr. Herrmann
Niehues, Jurgen Thomas, Charles Crochet and Waste
Systems, Inc., as Releasees. Letter Re: Change in
Certifying Accountant (incorporated by reference to
Exhibit 16.2 of 3CI's report on Form 8-K/A filed December
28, 1994).
27* Financial Data Schedule
* Previously filed
(b) REPORTS ON FORM 8-K - NONE
20
<PAGE> 21
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.
3CI COMPLETE COMPLIANCE
CORPORATION
(Registrant)
Dated: July 30, 1998
By: /s/ Charles D. Crochet
-------------------------------------
Charles D. Crochet
President
(Principal Executive Officer)
Dated: July 30, 1998
By: /s/ Curtis W. Crane
------------------------------------
Curtis W. Crane, CPA
Chief Financial Officer,
Secretary and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
21
